Use it... OR LOSE IT?

[FICOfreak]

Hi everyone, hope you've all been good!

I have a few ZERO balance credit cards I haven't used in months... but I've had them for a few years and I have NEVER missed a payment, so I always thought they looked good on my credit score and would be a great foundation to my FICO evaluation.

BUT... AM I WRONG KEEPING THE BALANCE AT ZERO? Do I HAVE to use my credit cards monthly or every couple/few months in order to actually BUILD credit and INCREASE my Fico? I have no idea... I am sure this is a very simple theory and someone has the answer, I really appreciate it.

How often, how much, do I have to use my credit card(s) in order to keep a healthy FICO activity that keeps the reports and my credit score happy!?

[txlimo]

I'm no expert by any means but I think as long as you are using them, keeping them under 1/3 of the available CL and making your payments, then it will help increase your FICO. I believe that just having the CC's sitting on your CR with no activity won't really help you. I'd be interested to hear what some of the more veteran folks here have to say..

[momof5]

Zero balance and dormant cards lose their 'postive'-ness on FICO after time. We advise using it on occasion, wait until the $+ bal reports, then PIF again.

[scottb99]

Always good to show some activity with the card, then of course as metioned always pay it off after it reports balance.

[admin]

Credit card companies are starting to close accounts that are not being used, so I would try and throw $50/month on there and pay them off as you go. Activity is useful for your credit score.

[isislc]

Credit card companies are starting to close accounts that are not being used, so I would try and throw $50/month on there and pay them off as you go. Activity is useful for your credit score.

Agreed, I have given my sock drawer cards names. For example, the oil change card, prescription card, once a month nice dinner card.

[matthewscott]

Agreed, I have given my sock drawer cards names. For example, the oil change card, prescription card, once a month nice dinner card.

Seriously? If so, then that's a cute idea. I would have to have little stickers on them to remember what their new name (or role) was.

[isislc]

Seriously? If so, then that's a cute idea. I would have to have little stickers on them to remember what their new name (or role) was.

Haa haa, I DO have stickers on them. That way when I need a particular card I have either my son or DF go get it for me and they know which one to get.

[jq26]

FICOfreak,

no one really knows what the formuals is because the FICO algorithm is cliosely guarded. There is certainly no shortage of guesses.

No use may be just fine. My wife does not use her cards ever. She is 32yrs old, has roughly 8 cards w/ $50,000 in available credit and 810-815 scores for each CRA. For this reason and others, I don't buy the "penalty" argument by FICO for non-use.

But just to be sure, use your cards but never carry balances. At the end of the month, pay in full. The lender makes a few bucks from the merchant (they get 2-5% of purchase), and they are les likely to close your crad on you if you show use.

The key here is use your cards on necessities such as food and gas. There is no need ior purpose to spending money on extras just to build credit.

[matthewscott]

For this reason and others, I don't buy the "penalty" argument by FICO for non-use.

True, but if you don't use the card then it might be canceled which could then affect a FICO score.

[Dre]

...and it would be nice to treat yourself every now and then.

Have a 0 balance on the card, then every 2-3 months, go out to eat or buy yourself something. Let the balance report and then PIF.

You rewarded yourself for working so hard (credit repair or at your job) and then PIF - You still win!

[FICOfreak]

...and it would be nice to treat yourself every now and then.

Have a 0 balance on the card, then every 2-3 months, go out to eat or buy yourself something. Let the balance report and then PIF.

You rewarded yourself for working so hard (credit repair or at your job) and then PIF - You still win!

Good advice and point. Thanks a lot for the help.

Since my last post I have contacted my CC company customer service through their email system, and all I got back from asking when my card gets reported, was a huge generic copy/paste about finance charges. NICE SERVICE CITI BANK!

[FICOfreak]

FICOfreak,

no one really knows what the formuals is because the FICO algorithm is cliosely guarded. There is certainly no shortage of guesses.

No use may be just fine. My wife does not use her cards ever. She is 32yrs old, has roughly 8 cards w/ $50,000 in available credit and 810-815 scores for each CRA. For this reason and others, I don't buy the "penalty" argument by FICO for non-use.

But just to be sure, use your cards but never carry balances. At the end of the month, pay in full. The lender makes a few bucks from the merchant (they get 2-5% of purchase), and they are les likely to close your crad on you if you show use.

The key here is use your cards on necessities such as food and gas. There is no need ior purpose to spending money on extras just to build credit.

Excellent post, thanks a lot for your thoughtful tips. Now I'm more confused, haha! The thing that confuses me, is the exact date the finance charges are added, and also the date that my card is reported the the CRA's. I want to create the balance of using my cards to my advantage, but never paying .01cent in fees/finance.

Great point about your wife though, maybe it doesn't make a difference, maybe it does. But with your example, I feel way better not worrying about using my cards simply to 'use' them.

[Dre]

You will NEVER have to pay a cent in interest if you PIF each month. Also, you wil be granted the grace period as well.

I look at my credit cards this way: They are a loan, and at the end of the month I have to pay the loan back in FULL. It helps me budget myself, and the question goes through my head: "Do I really need this? Do I really need to buy this right now?"

I only carry one credit card atm that has a recurring balance on it, but my other credit card - PIF so I don't have to pay the extra cents

[FICOfreak]

You will NEVER have to pay a cent in interest if you PIF each month. Also, you wil be granted the grace period as well.

I look at my credit cards this way: They are a loan, and at the end of the month I have to pay the loan back in FULL. It helps me budget myself, and the question goes through my head: "Do I really need this? Do I really need to buy this right now?"

I only carry one credit card atm that has a recurring balance on it, but my other credit card - PIF so I don't have to pay the extra cents

I see what you're saying, I was under the impression that if your credit card was due on the 14th of each month for example, there was a certain day the payment was due for the balance in full before the interest rates were added. They all just use the same equation of added the interest on a specific day the 1st of the month after each previous month's purchases have been made?

I wish there was a way to find out exactly who and when my credit cards report to, the dates are most important to me, because I want to have a balance when it reports, and then pay it off asap; of course never going over 20% of my total balance on any card from what I've read, right?

[jq26]

When I was rebuilding credit in 2005 and 2006, I used my cards every month for necessities. I'd use my Target card at Target to buy dog food and use my secured American Pacific Bank as my gas card. Then I'd pay them in full every month. The idea was that if I was buying this crap anyway, I would show responsible use of credit in the process. I think it worked out pretty well. And I NEVER paid interest.

Once I stopped rebuilding, I stopped using most of my cards. I probably shouldn't have. Chase closed my $3000 platinum card for 12 months of non-usage just last week. Even with my current 0% utilization and 720-740 FICOs.

So I think what was posted above is correct. Use 'em occasionally, PIF, and your scores will rise.

[FICOfreak]

Here's a question, I've been following all the awesome advice I've gotten on this thread... but, here's something that might be a problem, let me know your thoughts please...

Many times, out of paranoia I will purchase something with a credit card, and then literally drive home and get on my computer in order to make the payment in full to zero my card back out.

Is this detrimental? I assume I am "supposed" to wait until the day the credit card reports to the CB to show my balance and activity; please let me know if I should stop this practice, and if I truly have to wait until my balance is reported and THEN make the payment.

PS: I have tried asking my CC's when they report (what day) to the CB's, and all I got was a generic response explaining reporting and every "30 days," how can I get these fools to give me the DAY so I know how to manage my finances???

When I was rebuilding credit in 2005 and 2006, I used my cards every month for necessities. I'd use my Target card at Target to buy dog food and use my secured American Pacific Bank as my gas card. Then I'd pay them in full every month. The idea was that if I was buying this crap anyway, I would show responsible use of credit in the process. I think it worked out pretty well. And I NEVER paid interest.

Once I stopped rebuilding, I stopped using most of my cards. I probably shouldn't have. Chase closed my $3000 platinum card for 12 months of non-usage just last week. Even with my current 0% utilization and 720-740 FICOs.

So I think what was posted above is correct. Use 'em occasionally, PIF, and your scores will rise.

[Chester P. Dexter]

jq said:

But just to be sure, use your cards but never carry balances. At the end of the month, pay in full. The lender makes a few bucks from the merchant (they get 2-5% of purchase), and they are les likely to close your crad on you if you show use.

I was under the impression that lenders see you more favorably (e.g. raise your limit, lower your rate, don't close your card, etc.) if you carry a balance from time to time.

And I don't mean it has to be a large balance. How about: if you have a Target card, buy some dog food and a few other necessities. When the bill for $45 comes in, pay $15 if the minimum is $10 (I think you should always pay more than the minimum - how much more, I don't know) and then maybe with the next bill pay it off. Or pay it off over three cycles.

You'd wind up paying interest of... I dunno - a buck?

I thought this was a good way to impress your card issuers, at least once a year or so. I read somewhere that they like seeing that you can make a purchase (of any size), pay on it over a period of months, and pay it off.

Can anyone verify this or refute it?

[Denita]

FicoFreak, I don't know if this is still true or not, but when I kept up with reporting dates I found they were about one week (7 or 8 days) ahead of the due date on the statement for many cards. (This info is a little old - about 2007) Or you could experiment a little by paying your balance in full maybe 4 days ahead of the due date and check your cr reports to see if a balance reports even though you paid in full before the due date.

[Dre]

I keep getting Express coupons in the mail...mainly via email. I'm thinking I better go purchase something before they decide to close it.

I might try out some of the above posters tactics: buy something, pay a good amount, and then pay it off the following month. The reason I say this: I haven't really gotten an automatic CLI in about 4 years. So I'm going to try something new...I'll let you know if it works

[jq26]

I was under the impression that lenders see you more favorably (e.g. raise your limit, lower your rate, don't close your card, etc.) if you carry a balance from time to time.

I refute this. My wife has not carried a balance EVER. She has an 810 middle FICO. I don't carry balances either. My scores have never suffered. Credit card companies have been more than willling to extend me generous credit lines despite non-use, lack of balances carried, and a credit meltdown in 2004.

Even if you get a few points, is it worth it? I don't think so. I wouldn't give them one penny of your money if you can help it.

They may raise your limit though...but who cares? Does anyone really need monster credit lines?

[Dre]

I refute this. My wife has not carried a balance EVER. She has an 810 middle FICO. I don't carry balances either. My scores have never suffered. Credit card companies have been more than willling to extend me generous credit lines despite non-use, lack of balances carried, and a credit meltdown in 2004.

Even if you get a few points, is it worth it? I don't think so. I wouldn't give them one penny of your money if you can help it.

They may raise your limit though...but who cares? Does anyone really need monster credit lines?

I feel ya on that, Jq26. I PIF every month, and I only have one credit card that I leave a revolving balance...for right now.

The rest get PIF b/c you're right, I don't really want to give them any extra money, and it helps me manage my money and stay within my budget.

[calzer7]

I refute this. My wife has not carried a balance EVER. She has an 810 middle FICO. I don't carry balances either. My scores have never suffered. Credit card companies have been more than willling to extend me generous credit lines despite non-use, lack of balances carried, and a credit meltdown in 2004.

Even if you get a few points, is it worth it? I don't think so. I wouldn't give them one penny of your money if you can help it.

They may raise your limit though...but who cares? Does anyone really need monster credit lines?

I wonder if your wife's score would go up if it was at 620????

Is it worth a few points if your score is 620??? I think the OP was trying to raise his score to begin with.

I have always read that the more available credit you have the higher your scores. It seems to me that the FicoFreak doesn't have a problem paying off his credit cards so why not have high limits. He actually almost seems obsessed with paying them on time.

[FICOfreak]

Thanks everyone for your help...

I want to know the exact dates, so I can use the CC to my advantage to build FICO, BUT NEVER pay interest (pay it off in full the very next day.) Any tips from anyone on this? Should I call (HATE that, I don't like speaking with people that try to cross-sale me a million times and I can't understand them) e-mail, fax, etc?

I'm going to digest everything and see what would be best - be back soon

[FICOfreak]

I keep getting Express coupons in the mail...mainly via email. I'm thinking I better go purchase something before they decide to close it.

I might try out some of the above posters tactics: buy something, pay a good amount, and then pay it off the following month. The reason I say this: I haven't really gotten an automatic CLI in about 4 years. So I'm going to try something new...I'll let you know if it works

I made the mistake of asking why I haven't gotten an automatic CLI a few months back, and they took it as a verbal request to raise!!! They then pulled my credit BEFORE I even had a chance to tell them otherwise, and gave me the raise... thanks a lot for the next 2-3 years that pull will be on my CR, ugh!

Let us know how this goes though